Chanticleer Holdings, Inc. (HOTR: null) | Chanticleer Holdings Reports Operating Results for Fourth Quarter and Year Ended December 31, 2016

OTC

Chanticleer Holdings Reports Operating Results for Fourth Quarter and Year Ended December 31, 2016

Mar 28, 2017

OTC Disclosure News Service

– Chanticleer Holdings Reports Operating Results for Fourth Quarter and Year Ended December 31, 2016

CHARLOTTE, NC–(Marketwired – March 28, 2017) – Chanticleer Holdings, Inc. (NASDAQ: HOTR) (“Chanticleer,” or the “Company”), owner, operator and franchisor of multiple branded restaurants in the U.S. and abroad, today announced financial results for the fourth quarter and year ended December 31, 2016.

Annual Revenue Growth of 18.0%; First Full Year of Positive Adjusted EBITDA

  • Total revenue for year increased 18.0% to $41.7 million, primarily resulting from growth in the Fast Casual Better Burger segment.
  • Cost of sales as a percentage of restaurant sales improved to 33.0%, compared to 34.4% in the comparable period last year.
  • Operating expenses as a percentage of restaurant sales improved to 55.7% compared to 57.5% in the comparable period last year.
  • General and administrative expenses as a percentage of total revenue decreased to 13.9% from 19.2% of sales in the comparable period last year.
  • Loss from continuing operations improved to $(4.3) million or $(0.20) per share, compared to $(8.1) million or $(0.57) in the comparable period last year.
  • Net cash used in operating activities of continuing operations improved to $0.4 million compared to $4.2 million in the prior year.
  • Restaurant EBITDA improved 60.9% to $5.0 million compared to $3.1 million for the year.
  • Adjusted EBITDA improved to positive $82 thousand for the current year compared to a loss of $(1.8) million last year, with 2016 being the Company’s first year of positive Adjusted EBITDA.

Fourth Quarter Revenue Decreased 9.7%, Margins Improved, Quarterly Comparisons Impacted by Strong Dollar and Investment Management Revenue decline

  • Total revenue for the fourth quarter decreased 9.7% to $9.9 million from $10.9 million in the prior year, primarily due to the absence of non-recurring investment management revenue related to the Hooters dividend that was included in prior year revenue, as well as the impact of the stronger dollar on our foreign operations.
  • Cost of sales as a percentage of restaurant sales improved to 32.8% compared to 34.3% in the comparable quarter last year.
  • Operating expenses as a percentage of restaurant sales increased to 57.5% compared to 56.6% in the comparable quarter last year.
  • General and administrative expenses as a percentage of total revenue decreased to 14.2% from 15.0% in the comparable quarter last year.
  • Net loss from continuing operations increased to $(1.9) million or $(0.09) per share, compared to $(1.8) million or $(0.08) in the comparable quarter last year.
  • Restaurant EBITDA was relatively unchanged at $1.1 million compared to $1.0 million for the comparable quarter of last year.
  • Adjusted EBITDA was negative $(0.1) million compared to positive $0.1 million in the comparable quarter last year. The decline in quarterly Adjusted EBITDA was primarily due to the prior year including investment management revenue related to Hooters dividends, which did not recur in the fourth quarter of 2016.

Mike Pruitt, Chairman and CEO of Chanticleer, commented, “We made great progress in fiscal 2016 and our annual results demonstrate the efforts to build scale and drive efficiencies in our business over the past two years. We achieved our first year of EBITDA profitability, while establishing our regional brand strategy and laying the foundation to begin to accelerate growth.

“We have three Little Big Burger stores opening in the first four months of 2017 and are on track to open 8-12 new company and franchise stores by the end of this year. That’s a significant change coming out of a year where we opened no new company stores as we shift our focus from internal integration projects to external growth and franchising initiatives.”

Mr. Pruitt continued, “Given our increased emphasis on high returning assets and expanding our core brands, we are also committed to taking actions to strengthen our balance sheet and improve liquidity as we prepare to accelerate our growth in 2017.”

Conference Call

The Company will hold a conference call on Tuesday March 28, 2017 at 4:30 pm. Eastern Time.

To access the call, dial (877) 407-8133 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8040. To access the webcast, including the quarterly slide presentation, log onto the Chanticleer website at: http://www.chanticleerholdings.com/

A replay of the teleconference will be available until April 28, 2017 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 10289.

Use of Non-GAAP Measures

Chanticleer Holdings, Inc. prepares its condensed consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding Adjusted EBITDA and Restaurant EBITDA, which differ from the term EBITDA as it is commonly used. In addition to adjusting net income (loss) from continuing operations to exclude taxes, interest, and depreciation and amortization, Adjusted EBITDA also excludes pre-opening and closing costs for our restaurants, non-cash expenses, transaction and severance related expenses, change in fair value of derivative liability and other income and expenses.

In addition, Restaurant EBITDA also excludes management fee income, franchise revenue and general and administrative expenses. Adjusted EBITDA and restaurant EBITDA are not measures of performance defined in accordance with GAAP. However, adjusted EBITDA and restaurant EBITDA are used internally in planning and evaluating the company’s operating performance and by the Company’s creditors. Accordingly, management believes that disclosure of these metrics offers investors, bankers and other stakeholders an additional view of the company’s operations that, when coupled with the GAAP results, provides a more complete understanding of the Company’s financial results.

Adjusted EBITDA and Restaurant EBITDA should not be considered as alternatives to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the company’s performance. A reconciliation of GAAP net income (loss) to Adjusted EBITDA and Restaurant EBITDA is included in the accompanying financial schedules.

For further information, please refer to Chanticleer’s Quarterly Report on Form 10-K to be filed with the SEC on or about March 29, 2017 available online at www.sec.gov.

About Chanticleer Holdings, Inc.

Headquartered in Charlotte, NC, Chanticleer Holdings (HOTR), owns, operates and franchises fast casual and full service restaurant brands, including American Burger Company, BGR – Burgers Grilled Right, Little Big Burger, Just Fresh and Hooters.

For further information, please visit www.chanticleerholdings.com
Facebook: www.Facebook.com/ChanticleerHOTR
Twitter: http://Twitter.com/ChanticleerHOTR
Google+: https://plus.google.com/u/1/b/118048474114244335161/118048474114244335161/posts

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by these statements. The forward-looking statements contained in this press release are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by the words “anticipate”, “estimate”, “plan”, “project”, “continuing”, “ongoing”, “target”, “aim”, “expect”, “believe”, “intend”, “may”, “will”, “should”, “could”, or the negative of those words and other comparable words.

Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this press release include, without limitation, statements reflecting management’s expectations for future financial performance and operating expenditures, expected growth, profitability and business outlook, increased sales and marketing expenses, and the expected results from the integration of our acquisitions.

Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, but are not limited to, the Company’s ability to manage growth; integrate acquisitions; manage debt; meet development goals; and other important risks and uncertainties referenced and discussed under the heading titled “Risk Factors” in the Company’s filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in the forward-looking statements contained in this press release are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

    Chanticleer Holdings, Inc. and Subsidiaries
 Consolidated Balance Sheets
  
  

   
  
 December 31, 2016

  December 31, 2015
 ASSETS
   

    
 Current assets:
   

    
  Cash
 $268,575

  $1,224,415
  Accounts and other receivables
  524,481

   862,935
  Inventories
  539,550

   569,545
  Prepaid expenses and other current assets
  461,074

   568,251
  Assets of discontinued operations, current
  –

   593,430
    TOTAL CURRENT ASSETS
  1,793,680

   3,818,576
          Property and equipment, net
  11,513,693

   12,144,064
 Goodwill
  12,405,770

   12,702,139
 Intangible assets, net
  6,530,243

   6,776,936
 Investments
  800,000

   800,000
 Deposits and other assets
  442,737

   574,192
 Assets of discontinued operations
  –

   5,389,300
   TOTAL ASSETS
 $33,486,123

  $42,205,207
  
   

    
 LIABILITIES AND STOCKHOLDERS’ EQUITY
   

    
 Current liabilities:
   

    
  Accounts payable and accrued expenses
 $5,553,068

  $4,740,131
  Current maturities of long-term debt and notes payable, net of discount of of $0 and $171,868, respectively
  6,171,649

   5,383,003
  Current maturities of convertible notes payable, net of debt discount of $0 and $914,724, respectively
  –

   2,810,276
  Current maturities of capital leases payable
  18,449

   39,303
  Due to related parties
  194,350

   12,963
  Deferred rent
  173,775

   683,793
  Derivative liabilities
  –

   1,231,608
  Liabilities of discontinued operations, current
  –

   1,279,955
   TOTAL CURRENT LIABILITIES
  12,111,291

   16,181,032
 Long-term debt, less current portion
  287,445

   1,098,641
 Convertible notes payable, net of debt discount of $46,936 and $0, respectively
  3,678,064

   –
 Redeemable preferred stock: no par value, 19,050 and 0 issued and outstanding, respectively
  257,175

   –
 Capital leases payable, less current maturities
  –

   15,969
 Deferred rent
  1,961,751

   1,740,012
 Liabilities of discontinued operations
  –

   58,648
 Deferred tax liabilities
  1,485,554

   1,353,771
   TOTAL LIABILITIES
  19,781,280

   20,448,073
 Commitments and contingencies
   

    
 Common stock subject to repurchase obligation, 562,900 shares issued and outstanding
  349,000

   –
 Stockholders’ equity:
   

    
  Preferred stock: no par value; authorized 5,000,000 shares; 19,050 and 0 issued and outstanding, respectively
  –

   –
  Common stock: $0.0001 par value; authorized 45,000,000 shares; issued and outstanding 21,394,247 and 21,337,247 shares, respectively
  2,140

   2,134
  Additional paid in capital
  55,924,269

   55,365,597
  Accumulated other comprehensive loss
  (1,155,658

)  (987,695
) Accumulated deficit
  (42,206,325

)  (33,012,712
)  Total Chanticleer Holdings, Inc, Stockholder’s Equity
  12,564,426

   21,367,324
  Non-Controlling Interests
  791,417

   389,810
   TOTAL STOCKHOLDERS’ EQUITY
  13,355,843

   21,757,134
   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 $33,486,123

  $42,205,207
                   Chanticleer Holdings, Inc. and Subsidiaries
 Consolidated Statements of Operations and Comprehensive Loss
  
  

   

   

   
  
 Three Months Ended

  Year Ended
  
 December 31, 2016

  December 31, 2015

  December 31, 2016

  December 31, 2015
 Revenue:
   

    

    

    
   Restaurant sales, net
 $9,571,879

  $10,374,165

  $40,640,159

  $34,201,668
   Gaming income, net
  125,973

   107,236

   441,620

   367,666
   Management fee income
  25,000

   349,829

   100,000

   424,829
   Franchise income
  138,741

   88,476

   520,222

   359,424
    Total revenue
  9,861,593

   10,919,706

   41,702,001

   35,353,587
 Expenses:
   

    

    

    
  Restaurant cost of sales
  3,143,308

   3,562,882

   13,392,078

   11,754,515
  Restaurant operating expenses
  5,501,259

   5,873,416

   22,641,951

   19,677,617
  Restaurant pre-opening and closing expenses
  27,143

   24,453

   145,130

   505,098
  General and administrative expenses
  1,400,207

   1,634,716

   5,801,033

   6,798,642
  Depreciation and amortization
  602,882

   724,140

   2,341,697

   1,697,514
   Total expenses
  10,674,799

   11,819,607

   44,321,889

   40,433,386
 Operating loss from continuing operations
  (813,206

)  (899,901

)  (2,619,888

)  (5,079,799
)Other (expense) income
   

    

    

    
  Interest expense
  (642,463

)  (729,999

)  (2,347,019

)  (3,466,554
) Change in fair value of derivative liabilities
  –

   35,453

   1,231,608

   868,592
  Loss on extinguishment of debt
  –

   –

   –

   (315,923
) Other income (expense)
  (424,660

)  49,209

   (412,272

)  99,399
   Total other (expense) income
  (1,067,123

)  (645,337

)  (1,527,683

)  (2,814,486
)Loss from continuing operations before income taxes
  (1,880,329

)  (1,545,238

)  (4,147,571

)  (7,894,285
)  Income tax benefit (expense)
  (60,596

)  (217,867

)  (198,463

)  (187,568
)Loss from continuing operations
  (1,940,925

)  (1,763,105

)  (4,346,034

)  (8,081,853
) Discontinued operations
   

    

    

    
  Loss from operation of discontinued operations, net of tax
  –

   (795,040

)  (1,304,627

)  (6,373,790
) Loss on write down of net assets
  113,907

   –

   (3,762,253

)  –
 Consolidated net loss
  (1,827,018

)  (2,558,145

)  (9,412,914

)  (14,455,643
) Less: Net loss (income) attributable to non-controlling interest of continuing operations
  21,805

   4,162

   75,417

   (9,088
) Less: Net loss (income) attributable to non-controlling interest of discontinued operations
  –

   148,386

   260,925

   2,328,206
 Net loss attributable to Chanticleer Holdings, Inc.
 $(1,805,213

) $(2,405,597

) $(9,076,572

) $(12,136,525
) 
   

    

    

    
 Net loss attributable to Chanticleer Holdings, Inc.:
   

    

    

    
  Loss from continuing operations
 $(1,919,120

) $(1,758,943

) $(4,270,617

) $(8,090,941
) Loss from discontinued operations
  113,907

   (646,654

)  (4,805,955

)  (4,045,584
)Net loss attributable to Chanticleer Holdings, Inc.
 $(1,805,213

) $(2,405,597

) $(9,076,572

) $(12,136,525
) 
  –

    

    

    
 Other comprehensive loss:
   

    

    

    
   Unrealized loss on available-for-sale securities, net of tax
 $-

  $(4,039

) $(24,501

) $(4,039
)  Reclassification of loss recognized in net loss, net of tax
  223,743

   –

   223,743

   –
   Foreign currency translation
  (131,613

)  (71,757

)  (271,452

)  (963,528
)   Total other comprehensive loss
  92,130

   (75,796

)  (72,210

)  (967,567
)    Comprehensive loss
 $(1,713,083

) $(2,481,393

) $(9,148,782

) $(13,104,092
) 
   

    

    

    
 Net loss attributable to Chanticleer Holdings, Inc. per common
   

    

    

    
 share, basic and diluted:
   

    

    

    
  Continuing operations attributable to common stockholders, basic and diluted
 $(0.09

) $(0.08

) $(0.20

) $(0.57
) Discontinued operations attributable to common stockholders, basic and diluted
 $0.01

  $(0.03

) $(0.22

) $(0.28
)Weighted average shares outstanding, basic and diluted
  21,957,147

   21,337,247

   21,695,030

   14,245,437
                                   Chanticleer Holdings, Inc. and Subsidiaries
 Consolidated Statements of Cash Flows
  
  

   
  
 December 31, 2016

  December 31, 2015
 Cash flows from operating activities:
   

    
 Net loss
 $(9,412,914

) $(14,455,643
)Net loss from discontinued operations
  5,066,880

   6,373,790
 Net loss from continuing operations
  (4,346,034

)  (8,081,853
)Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:
   

    
   Depreciation and amortization
  2,341,697

   1,697,514
   Loss on extinguishment of debt
  –

   315,923
   Loss on disposal of property and equipment
  –

   514,522
   Loss (gain) on sales of investments
  –

   169,639
   Common stock and warrants issued for services
  24,510

   279,362
   Common stock and warrants issued for interest
  349,000

   –
   Amortization of debt discount
  1,039,656

   2,379,951
   Amortization of warrants
  –

   22,375
   Change in assets and liabilities:
   

    
     Accounts and other receivables
  (336,546

)  96,261
     Prepaid and other assets
  113,633

   (78,236
)    Inventory
  33,217

   6,016
     Accounts payable and accrued liabilities
  1,540,463

   (235,283
)    Change in amounts payable to related parties
  194,350

   (198,669
)    Derivative liabilities
  (1,231,608

)  (868,592
)    Deferred income taxes
  131,783

   94,527
     Deferred rent
  (288,279

)  (300,259
)   Net cash used in operating activities from continuing operations
  (434,158

)  (4,186,802
)   Net cash used in operating activities from discontinued operations
  (75,000

)  (1,064,363
)   Net cash used in operating activities
  (509,158

)  (5,251,165

   

    
 Cash flows from investing activities:
   

    
  Purchase of property and equipment
  (1,191,174

)  (1,798,221
) Cash paid for acquisitions, net of cash acquired
  (72,215

)  (9,022,791
) Proceeds from sale of investments
  8,902

   330,361
    Net cash used in investing activities from continuing operations
  (1,254,487

)  (10,490,651

   

    
 Cash flows from financing activities:
   

    
  Proceeds from sale of common stock and warrants
  –

   14,921,903
  Proceeds from sale of preferred stock
  257,175

   –
  Loan proceeds
  275,000

   2,813,074
  Loan repayments
  (513,523

)  (891,529
) Capital lease payments
  (40,636

)  (52,807
) Contribution of non-controlling interest
  823,671

   –
    Net cash provided by financing activities from continuing operations
  801,687

   16,790,641
  Effect of exchange rate changes on cash
  6,118

   (4,944
)Net increase (decrease) in cash
  (955,840

)  1,043,881
 Cash, beginning of period
  1,224,415

   180,534
 Cash, end of period
 $268,575

  $1,224,415
                   

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The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group Inc. are solely responsible for the accuracy of such news releases.

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